AVIATION FUEL MANAGEMENT AGREEMENT
This agreement is made and entered into between Western Pacific Airlines,
Inc., a Delaware corporation, having its principal place of business at 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000 (hereinafter
called "Buyer") and Mercury Air Group, Inc. having its a place of business at
00000 X.X.X. Xxxx., Xxxxx 000, Xxxxxxx, Xxxxx 00000 (hereinafter called
"Administrator").
WHEREAS, Administrator wishes to provide Fuel Management services to Buyer
and Buyer wishes to obtain such services from Administrator, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, it is agreed as follows:
1. PERIOD. The period of this Agreement shall commence upon the date
hereof and terminate April 30, 1998. Administrator agrees that, during this
contractual period, it shall use its best efforts in obtaining fuel prices for
Buyer which are the most competitive available in a given market relative to
other carriers of Buyer's same scope of size and operations.
2. SPECIFICATIONS. Administrator shall provide Fuel Management Services
to Buyer, which shall include the following services:
(a) Provide or cause to be provided to Buyer aviation fuels at
various locations, including the provision of storage and into-plane services,
in the name and for the account of Buyer.
(b) Solicit and review fuel and into-plane bids with Buyer including
explanation of all information regarding market conditions and all cost
components.
(c) Monitor the aviation fuel consumption at each location and ensure
proper quantities are available for the forecast operations of Buyer.
(d) Make arrangements for the provision of aviation fuel and into-
plane services at the alternate and diversion locations required in accordance
with applicable FAA and/or other governing authority.
(e) Provide or cause to be provided fueling of aircraft at off-line
stations as requested.
(f) Receive, review and verify correctness of all invoices from fuel
suppliers, into-plane agents and others related to fuel, such as truckers and
state tax agencies. Obtain corrections from the suppliers and agents as
necessary.
(g) Provide a report weekly which shall detail component cost; base
market price and all applicable duties, taxes and fees.
(h) Provide a monthly gallon report showing uplift by-city and by day
of the month.
(i) Provide summaries of fuel tickets (as provided by into-plane
agents) and fuel supplier invoices for review and audit by Buyer (such review
and audit to be upon Buyer's request and conducted in a mutually convenient
manner given the scope of the audit).
(j) Receive and pay all fuel, fuel storage, throughput, consortium
and into-plane delivery bills on behalf of Buyer.
3. FEES. See ATTACHMENT "A".
4. PAYMENTS. Buyer agrees to pay Administrator the full amount of all
invoices for product and services including any applicable duties, taxes, fees
or other charges levied or imposed, whether directly or indirectly, on the
aviation products or services furnished to Buyer. Buyer shall also pay all
into-plane fees, consortium fees, throughput fees and other fuel service fees.
It is further agreed that if Administrator shall be called upon to pay any tax,
fee or other charge not now in effect, Administrator shall promptly notify Buyer
and shall thereupon be entitled to collect such amounts from the Buyer.
5. TERMS. Payment shall be due twenty (20) days from the date of the
invoice from Administrator to Buyer via wire transfer to the account specified
on ATTACHMENT "A". Notwithstanding the credit terms specified, Buyer shall have
an initial credit limit (the "Credit Limit") with Administrator of up to
$2,000,000 (Two Million Dollars). If Buyer exceeds the Credit Limit, then Buyer
agrees to make payments to Administrator within no more than two business (2)
days after notice to Buyer (which may be telephonic) in amounts such that the
amounts payable by Buyer to Administrator are equal to or less than the Credit
Limit. All amounts received by Administrator from Buyer shall be applied to the
invoices with the earliest dates.
6. FINANCE CHARGE. Administrator shall have the right to charge and
collect from the Buyer a reasonable service charge in the amount of the lesser
of 10% per annum or the highest non-usurious rate allowed by applicable law on
past due outstanding and uncollected balances. To the extent such highest non-
usurious interest rate chargeable hereunder is determined by reference to the
laws of the State of Texas, same shall be determined by reference to the
indicated (weekly) rate ceiling (as defined and described in Texas Revised Civil
Statutes, Article 5069-
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1.04, as amended) at the applicable time in effect. It is the intention of
Administrator and Buyer to conform strictly to all applicable usury laws. It
is therefore agreed that (i) the aggregate of all interest and other charges
constituting interest under applicable law and contracted for, chargeable or
receivable under this Agreement or otherwise in connection with this
Agreement shall never exceed the maximum amount of interest, nor produce a
rate in excess of the maximum rate of interest that Administrator may charge
Buyer under applicable law and in regard to which Buyer may not successfully
assert the claim or defense of usury, and (ii) if any excess interest is
provided for, it shall be deemed a mistake and the same shall either be
refunded to Buyer or credited to the unpaid principal amount hereof and this
Agreement shall be deemed reformed automatically so as to permit only the
collection of the maximum legal non-usurious rate and amount of interest. All
sums paid or agreed to be paid to Administrator for the use, forbearance or
detention of money to the full extent allowed by applicable law, shall be
amortized, prorated, allocated and spread through the full term of this
Agreement.
7. DELIVERY. Measurement of the quantities of the Product delivered
shall be determined by calibrated meters and any complaint by the Buyer, or its
representative, with respect to defects in quality or short delivery shall be
made to Administrator's representative at the airfield concerned at the time of
the delivery or upon receipt of the ticket or invoice covering the delivery of
product and/or services and confirmed in writing within seven (7) calendar days.
The Buyer, or the Buyer's representative, shall have the right to take in the
presence of the Administrator or Administrator's representative samples of the
Product delivered. Where Buyer's flight schedule requires maintenance of
inventory, Administrator shall have the right, upon notice to Buyer, to deliver
into-storage (as opposed to into-wing) and Administrator shall xxxx for such
fuel based on bulk delivery into-storage. Notwithstanding the foregoing,
Administrator will still coordinate into-wing delivery.
8. NOTICES. All notices given by either party to the other party
pursuant to this Agreement shall be in writing and shall be deemed given when
delivered to the other by an overnight mail service which maintains records
confirming delivery, addressed as follows:
Administrator: Mercury Air Group, Inc.
00000 X.X.X. Xxxx., Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx
With copy to:
Mercury Air Group, Inc.
0000 XxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Executive Vice President Fuel Sales/Credit
Manager
and
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Mercury Air Group, Inc.
000 X. Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx
Buyer: Western Pacific Airlines, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
Attn: President and Vice President Vendor
Management
9. FORCE MAJEURE. No act or commission by Administrator or Buyer in the
performance of any obligation of this Agreement shall be deemed a breach of this
Agreement nor create any liability for damages if the same shall arise from any
cause or causes beyond the reasonable control of Administrator or Buyer,
including, but not limited to, the following, which for the purpose of this
Agreement shall be regarded as beyond the reasonable control of Administrator or
Buyer: acts of God; acts of federal, state or local government or any agency
thereof, fires; storms; floods; earthquakes; explosions; accidents; wars;
insurrections; riots; sabotage; strikes; lockouts; disputes or differences with
workers; failures or delays in transportation; or exhaustion, reduction or
unavailability of petroleum products at the source of supply from which
deliveries are made hereunder resulting from shortages or circumstances beyond
the reasonable control of Administrator. In the event that Administrator or
Buyer finds it necessary to avail itself of the foregoing force majeure
provision, the term of this Agreement shall not be extended thereby but any
quantities otherwise deliverable hereunder shall be rateably reduced or
suspended for the period during which such force majeure may exist. In the
event that Administrator takes any action contemplated in this paragraph, Buyer
may obtain from any other supplier or suppliers that portion of its requirements
for such Product which Administrator is unable to furnish to Buyer under this
Agreement and such portion so purchased from another supplier or suppliers shall
be deducted from the quantities Buyer has agreed to purchase and Administrator
has agreed to sell under this Agreement during the continuation of such event
and for such period thereafter as to which Buyer may have been required to
commit to the other supplier or suppliers in order to obtain such requirements.
10. OBLIGATION. Nothing herein contained shall excuse Buyer from paying
Administrator when due any amounts payable hereunder.
11. DEFAULT/TERMINATION. Buyer shall be in default ("Default" or "Event
of Default") hereunder (i) for failure to make all payments due hereunder on a
timely basis and such failure continuing for three (3) business days after
written notice to Buyer, (ii) for any material violation, breach or default of
any non-payment covenant, term or condition under this Agreement and the failure
of Buyer to cure such default within thirty (30) days after written notice of
such default, or (iii) the occurrence of an "Event of Default" under the
Agreement Relating to Guaranty (as hereinafter defined). Administrator shall be
in default hereunder for any material violation, breach or default of any
covenant, term or condition under this Agreement or
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any other agreement between Buyer and Administrator and the failure of
Administrator to cure such default within fifteen (15) days after written
notice of such default. Either party may terminate this Agreement upon the
occurrence and during the continuance of an Event of Default. Upon
termination of this Agreement for any reason (other than by Buyer as a result
of a default by Administrator) or upon the occurrence of a default by Buyer,
then (i) all outstanding invoices of Buyer to Administrator (regardless of
the terms of payment or the due dates) at all locations must be paid by Buyer
to Administrator within five (5) days (or thirty (30) days in the event that
this Agreement is terminated by Buyer as a result of a default by
Administrator) of the effective date of termination, (ii) upon demand by the
Bank (as hereinafter defined), Buyer must immediately pay to the Bank all
amounts due and owing on the Note (as hereinafter defined), (iii) Buyer must
pay all amounts due and owing to Administrator on the Agreement Relating to
Guaranty (as hereinafter defined), and (iv) Buyer acknowledges that any of
such events shall be an Event of Default under the Note. The Bank shall
accelerate and demand payment of the Note upon the occurrence of an Event of
Default.
12. REQUIRED PRE-PAYMENT. Notwithstanding the foregoing periods for
notice and cure prior to the occurrence of an "Event of Default", on twenty-four
(24) hours written notice, Administrator may require Buyer to pre-pay for all
fuel delivered pursuant to this Agreement following the failure of Buyer to make
all payments due hereunder on a timely basis and such pre-payment requirement
shall remain in effect until such time as Buyer cures the applicable non-payment
or Administrator terminates this Agreement as a result of an "Event of Default"
after giving the required notice and cure periods.
13. ASSIGNMENT. Neither this Agreement nor any right hereunder or
interest herein may be assigned or transferred by either party directly or
indirectly without the prior written consent of the other. The Agreement shall
extend to and be binding upon the successors and assigns of Administrator and
Buyer.
14. ENTIRETY OF CONTRACT. Buyer has executed and delivered to Compass
Bank-Texas (the "Bank") in Houston, Texas, USA, that certain promissory note
(the "Note") dated of even date herewith in the original principal amount of Six
Million Dollars ($6,000,000) with interest at the rate of ten percent (10%) per
annum with a maturity date of February 1, 1998. Administrator has guaranteed
payment of the Note. Buyer and Administrator have also executed that certain
Agreement Relating to Brokering of Financing and Guaranty ("Agreement Related to
Guaranty") dated of even date with the Note. This Agreement, the Agreement
Related to Guaranty, and the Note comprise the agreement of the parties.
Furthermore, in the course of the contemplated business relationship between
Buyer and Administrator, it is anticipated that Buyer may forward documents to
Administrator that may contain various terms and conditions. Buyer and
Administrator agree that if there is any conflict between such documentation
sent to Administrator by Buyer and this Agreement, then this Agreement shall
govern. This Agreement supersedes all prior communications, written or wire,
regarding this transaction and cannot be modified without written consent of
Administrator and Buyer. Without limiting the generality of the foregoing, this
Agreement supersedes the Aviation Fuel Sales Agreement between Buyer and
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Administrator dated May 31, 1995 (the "Aviation Fuel Sales Agreement").
Immediately upon execution of this Agreement, Buyer will pay all invoices
presently outstanding under the Aviation Fuel Sales Agreement (regardless of the
credit terms provided) and all amounts subsequently invoiced under such
agreement for fuel provided prior to the date hereof will be paid in accordance
with the credit terms set forth herein.
15. ATTORNEYS' FEES. Should any party hereto retain counsel for the
purpose of enforcing, or preventing the breach of, any provision of this
Agreement, the prevailing party shall be entitled to be reimbursed by the losing
party for all reasonable costs and expenses incurred thereby, including, but not
limited to reasonable attorneys' fees (including costs of appeal).
16. INDEPENDENT CONTRACTOR. Both parties understand and agree that no
partnership, joint venture or relationship is created hereby. Each party shall
be conclusively deemed to be an independent contractor and not under the control
or supervision of the other.
17. DISCLAIMER OF WARRANTIES. Administrator makes no warranty as to the
quality control aspects of the fuel delivered at the various locations, the
storage services at the various locations or the into-plane services provided at
the various locations. Buyer shall be solely responsible for insuring that the
into-plane delivery, fuel receipt and storage services arranged by Administrator
under this Agreement meet Buyer's quality control requirements. Administrator
shall, upon request, furnish periodic reports to Buyer from each of the
refineries which manufactures Product sold to Buyer under this Agreement, on the
conformity of such Product to those specifications as established by Buyer.
EXCEPT FOR THIS WARRANTY, ADMINISTRATOR MAKES NO OTHER WARRANTY EXPRESS OR
IMPLIED AND ANY IMPLIED WARRANTY OF MERCHANT ABILITY OR FITNESS FOR PARTICULAR
PURPOSE WHICH EXCEEDS THE FOREGOING WARRANTY IS HEREBY DISCLAIMED BY
ADMINISTRATOR AND EXCLUDED FROM THIS AGREEMENT. IN NO EVENT SHALL EITHER PARTY
BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL, SPECIAL OR INCIDENTAL DAMAGES;
provided, however, that this provision shall in no way limit either party's
right to indemnification with respect to third-party claims.
18. EXCLUSIVITY. Buyer agrees that during the term of this Agreement all
aviation fuel purchased by Buyer for its aircraft shall be purchased under this
Agreement and otherwise subject to the fees set forth on ATTACHMENT A.
19. GOVERNING LAW, JURISDICTION AND VENUE. The parties hereto agree that
this Agreement and any dispute arising hereunder shall be governed by the laws
of the State of Texas. The parties further agree the State of Texas has
personal jurisdiction over the parties to this Agreement. The parties further
agree that venue of any lawsuit or legal proceeding shall be in the District
Courts of Xxxxxx County, Texas in the United States District Court for the
Southern District of Texas. Houston Division.
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WHEREOF, the parties hereto have affixed their signatures and cause this
agreement to be duly, executed this 25th day of April 1997.
BUYER: ADMINISTRATOR:
Western Pacific Airlines, Inc. Mercury Air Group Inc.
BY: BY:
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TITLE: TITLE:
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ATTACHMENT "A"
SERVICE FEES
RATE/GALLON
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For gallons delivered before September 1, 1997 $.0025
For gallons delivered after September 1, 1997 $.0075
